According to rumors, Goldman Sachs conducted its first OTC cryptocurrency option trade with Galaxy Digital. This is a significant milestone in the crypto derivatives market and marks the first such trade between all the major US banks.
Bitcoin Options Trades
Unidentified sources stated earlier this month that Goldman was considering offering crypto options to institutional clients. It was only one of many Wall Street Banks that had begun exploring this idea.
CNBC reported today that the bank would soon announce its first such trades. This trade will involve a non-deliverable option with Galaxy Digital.
Options give reserve holders the ability to purchase or sell underlying securities at a certain price and for a specified time. They can trade volatility without being subject to its risks.
Non-deliverable options refer to options that are settled in cash at maturity rather than the underlying asset such as Bitcoin. This option is not available to Goldman for actual Bitcoin trading on the spot market.
Goldman began trading Bitcoin futures contracts last year with Galaxy Digital. The bank is acting as principal in these transactions, but the riskier options for Goldman will make the transaction more difficult.
Co-president of Galaxy Digital, Damien Vanderwilt believes that Goldman’s involvement in this market demonstrates crypto’s maturity and value as an asset class.
He stated that this trade was the first step banks took to provide customized exposures to the cryptocurrency market for their clients.
Vanderwilt stated that options trades are more relevant for institutions than futures because of the risks banks take on.
Galaxy and Goldman’s Crypto Views
With its openness to cryptocurrency, the investment bank has clearly come a long ways. A former CEO of Goldman has admitted that cryptocurrency is “happening” despite opposition years ago.
Galaxy Digital CEO Mike Novogratz, on the other hand is a well-known voice in crypto. He claims that Bitcoin will be “digital gold” in 3000 years, and that Ethereum will take it even further.
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